Union of Greek Shipowners Disagrees with European Commission on Taxation Issues
The Union of Greek Shipowners has responded to the European Commission’s recently published decision alleging that some provisions of the Greek shipping taxation regime are in breach of EU state aid provisions and, in particular, the conditions set out in the current Community Guidelines on State Aid to Maritime Transport (SAG).
“As the official representative of the Greek shipping sector,” a statement from the organization said, “the Union of Greek Shipowners has the duty to point out that there is no effective distortion of competition in the maritime field in the EU. Any fundamental changes to the institutional and fiscal framework in which the Greek shipping community is presently operating, would have unforeseeable consequences which would be detrimental not only for Greece but also for the rest of the EU. They would seriously undermine one of its most important strategic sectors which remains prominent internationally in the face of fierce competition.”
The main arguments put forward by the Greek authorities and the UGS were based on the fact That the Greek institutional shipping regime predates the State Aid Guidelines (SAG) by many years. In particular, the Greek institutional framework for shipping taxation and especially the Greek model of tonnage tax for ships was introduced in 1953 and re-established in 1975 and became more or less the precedent for the development of the SAG and of regimes in the EU and internationally. Hence, Greece is not exceptional in this respect.
The Greek maritime framework constitutes pre-accession law, which was recognized during the accession of Greece to the EEC in 1981 and has not been questioned until now and is an important part of the policy to attract inward investment in the maritime sector.
A large part of the Greek shipping taxation regime is underpinned by constitutional guarantees which were put in place following the overturning in 1974 of the seven-year military dictatorship in Greece.
“It is significant that the 1997 Maritime SAG were not introduced in the form of an EU Directive or Regulation with a view to imposing uniformity of application across the member states,” the union statement went on to say. “The SAG deliberately provide a flexible soft law which can take account of the different characteristics, size and importance of shipping in the member states and the ability and willingness of member state governments to adopt its provisions. In this respect, they provide a framework, not a level playing field since even the levels of tonnage tax paid for vessels of the same size differ from member state to member state. Nevertheless, the SAG have been successful in stemming deflagging from EU registers and in meeting intense international competition for the establishment of shipping companies. It is worth noting the severe demise of the EU commercial shipbuilding industry for lack of appropriate support to deal with international competition.
“The decision of the European Commission regarding the Greek shipping taxation system and its statement that it will be used as a precedent for the assessment of other EU shipping regimes will seriously disrupt the shipping sector in the EU after twenty years of successful growth without formal complaints and negligible intra-EU reflagging or re-establishment of shipping companies,” the statement concluded.
“Greek shipping is engaged primarily in the bulk/tramp cross-trades worldwide which are a textbook example of free and fair competition and one of the last remaining truly entrepreneurial sectors comprising primarily small and medium sized unquoted private companies, mostly family businesses. It is important that the characteristics of this business model are understood and supported.”
The organization also argued that the Greek shipping industry was never part of the debt problems of the Greek state. The Boston Consulting Group (BCG) and the Foundation for Economic and Industrial Research (IOBE) reported that Greek shipping contributes over seven percent of GDP, provides employment to 200,000 people and covers over 30 percent of the trade deficit. The Greek shipping industry also provides benefits for European shipping—over 46 percent of which is owned by Greek interests—and for the European maritime cluster and economy.
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